The Indian services sector registered its fastest pace of expansion in business activity in 15 months in December that helped create more jobs, however, the outlook for 2010 remains cautious according to a survey released on Wednesday.
The HSBC Markit Business Activity Index, that surveyed 400 firms, rose to 57.41 in December, which was the highest since September 2008, after slowing to 55.20 in November.
The index has been above 50 for eight month, which marks the point of expansion of business activity from contraction, for eight months as the economy shakes off the impact of the global slowdown. In the moths before that the index was below the 50 level and hit a low of 40.3 in February.
According to Robert Prior-Wandesforde, senior Asian economist at HSBC, as with manufacturing output index, the services equivalent showed a rising trend in December pointing to an improving economy and that the strong July-September GDP release was no flash in the pan.
Growth in the Indian manufacturing sector rose for the first time in three months in December, with activity reaching its highest since May on sharp rises in new work and output, according to a survey.
Prior-Wandesforde said that increase in wages for government workers lagged effects of policy stimulus and the recovery in external demand would help even out any spill-overs on industry and services from a drop in farm output in the coming months.
The business expectations sub-index, however slowed for the second consecutive month to 65.56 in December its lowest in 10 months after clocking 71.58 in November.
"The degree of positive sentiment fell sharply since November, as a greater proportion of companies reported that they expect activity in 12 months' time to be broadly similar to current levels," according to the HSBC Markit report.